Difference Between Life Insurance And Health Insurance

Life is filled with uncertainties, and unfortunate events can occur without warning.

Although it’s impossible to predict these events, it’s always a good idea to be prepared. Securing your and your family’s future is essential to withstand such unforeseen events. This is why people opt for life and health insurance that provides a financial safety net.

And while they might sound similar, health and life insurance do have significant differences.

So, here we discuss what these are and the major differences between life insurance and health insurance.

What is life insurance?

Life insurance is insurance whereby the life of a person is insured. In the event of the insured person’s death, their beneficiaries receive a predetermined amount of money, known as the death benefit. Life insurance usually covers both natural and accidental deaths.

What is health insurance?

A health insurance policy covers specific medical expenses incurred by the insured due to an illness or accident. It covers you and your family from heavy hospital bills and expenses.

Difference between life insurance and health insurance

#1. Financial cover

The best life insurance policy ensures your family’s financial security in your absence. It offers the sum assured to the beneficiaries in the case of the insured’s demise.

On the contrary, health insurance is a financial safety net for unexpected medical emergencies. It covers medical expenses arising from illnesses, accidents, or injuries.

#2. Tenure

One significant difference between life insurance and health insurance is their respective tenures. Life insurance has a fixed, long-term duration. It terminates once the tenure is completed.

Conversely, health insurance is generally short-term and has no fixed tenure. You can renew the policy once the term expires.

#3. No-claim bonus

No-claim bonus is a bonus your insurer gives you on a claim-free year. This benefit applies to health insurance, where you can either receive a discount on premium or an increase in the sum assured. However, this benefit is not available in life insurance.

#4. Tax benefits

Under Section 80C of the Income Tax Act, you can get a tax deduction of up to Rs 1.5 lakhs for life insurance premiums. The death benefits, maturity benefits, bonuses, and loyalty additions are tax-exempt under Section 10(10D).

On the other hand, health insurance premiums qualify for a tax deduction of up to Rs 25,000 for self and family or Rs 50,000 for senior citizens under Section 80D of the ITA.

#5. Return on investment

Life insurance plans often offer a ‘ Return of Premium’ benefit. If you outlive the policy term, you can get the money you invested as premiums back upon maturity.

But that’s not the case with health insurance. You only receive the amount back as reimbursement claims for the medical expenses you incurred during the policy term.

Final thoughts

Although there are distinct differences between life insurance and health insurance, both serve the purpose of safeguarding your family and loved ones.

If you’re in search of a reliable insurance provider, turn to Tata Capital Moneyfy. We provide a wide range of protection plans tailored to meet your family’s needs at every phase of life, all at affordable prices.

To buy health insurance online, visit Tata Capital’s Monefy website or download the Moneyfy App.